Q.1: Relatd to IFE matrix wat is meant by following:
A) If financial ratios are scored 3 = ?
B) If crisis manangement strength is 4 = ?
… C) If the rating is 2.85 = ?
(3 marks)Q.2: explain concentric diversification strategy with the help of two exmples of local or multinational firms operating in pakistan? (3 marks)

Q.3: wat is market research explain its implications for a firm? (5 marks)

Q.4: xyz firm is come to know the importanc of MIS systm so they want to have an MIS systm in thier organization.explain how can a MIS systm can help the manager to improve decision making of an organization? (5 marks)

List down and explain five steps that comprise an effective framework for conducting an IFE Matrix.

Steps involved in the development of IFE Matrix:

2

1-List any internal factors identified in the internal audit. Only ten to twenty factors will be

enough including strengths and weakness. Use percentage, ratios and comparative numbers.

2-Assign weights to each factor ranging from 0 to 1.The rates assigned indicate the relative

importance of each factor to being successful. Sum of all weights must be equal to 1.

3-Assign 1-4 rating to each factor to see whether the factor represents major weakness (rate=1) or minor weakness (rate=2), minor strength (rate =3 ) or major strength (rate=4).

4- Multiply each factor’s weights to its ratings to determine its weighted score.

5-Sum the weighted score of each variable page#47

Question No: 29 ( Marks: 3 )

What activities are performed in strategy evaluation stage under controlling function of management?

Controlling function of management includes all those activities undertaken to ensure that actual operations conform to planned operations. Controlling function of management is particularly important for effective strategy evaluation. Controlling function of management has the following activities in strategy evaluation.

In your opinion, what can be the circumstances when a Low Cost Producer in an industry brings effectiveness?

Low-cost producer in an industry can be especially effective when the market is

Composed of many price-sensitive buyers, when there are few ways to achieve product differentiation, when buyers do not care much about differences from brand to brand, or when there are a large number of buyers with significant bargaining power The basic idea is to under price competitors and thereby gains market share and sales, driving some competitors out of the market entirely. Page#86

Question No: 31 ( Marks: 5 )

What are the major stakeholders that affect pricing decisions?

Following are the five major stakeholders which affect pricing decisions.

1. Governments

2. Suppliers

3. Distributors

4. Consumers

5. Competitors page#62

3

Question No: 32 ( Marks: 5 )

Mergers or acquisitions are the methods by which two companies combine to form a larger company. What can be the reasons for achieving mergers or acquisitions?

 The 1st reason for acquisition and merger to combine is that they believe that synergy

exist and by joining both of us can achieve something more than we can get individually.

 Acquisition and merger join to spread its risks and exploit new markets.

 The idea is that the larger firm resulting from the merger can produce more cheaply than the previously separate firms.

 firms may derive tax advantages from a merger or acquisition

 Gain new technology

 Gain economies of scale

 Improve capacity utilization

Question No: 32 ( Marks: 5 )

Give at least two examples of multinational or local firms that are operating in Pakistan and have initiated backward integration. Justify your answer?

Explain concentric diversification strategy with the help of two examples of local or multinational firms operating in Pakistan?

1. List down and explain five steps that comprise an effective framework for conducting an EFE Matrix.

Five-Step process:

 List key external factors (10-20)

􀀀 Opportunities & threats

You have to prepare a list of all external factors which will affect the EFE matrix. These factors should be two points to be kept in mind these are opportunities and threats.

 Assign weight to each (0 to 1.0)

Sum of all weights = 1.0

Now you have to arrange them according to their weight age that which factor is most important.

It should be weight age in % ages. The sum of the total of all the factors should always be one.

 Assign 1-4 rating to each factor

• Firm’s current strategies response to the factor: how well firms response to these factors.

 Multiply each factor’s weight by its rating

• Produces a weighted score

How the firm will respond to these factors external factors. Such criteria are known as rating.

 Sum the weighted scores for each

4

Determines the total weighted score for the organization.

• Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5

PAGE#44

Q_1) what is average collection period? (3 marks)

The approximate amount of time that it takes for a business to receive payments owed, in terms of receivables, from its customers and clients.

Calculated as:

Where:

Days = Total amount of days in period

AR = Average amount of accounts receivables

Credit Sales = Total amount of net credit sales during period

Q_2) Suppose according to the EFE matrix, the weighted score of a certain company is

2.10. How that company will interpret this score in terms of its external factors? (3 marks)

Cultural and ideological differences top the list. In evaluating joint venture partners, most companies don’t perform a proper compatibility and integration analysis

Poor Leadership

Poor or unclear leaders are another top reason of joint venture failure. Too often, joint venture partners insist on sharing a project leadership role. When the parties disagree, a standoff occurs.

Insufficient Planning

Insufficient planning is also one of the most prevalent reasons for failed joint ventures. Too often, a joint venture “plan” consists of nothing more than a statement of each party’s intended contributions to the project and their respective share of the profits.

Other Failure Reasons

Other reasons of joint venture failure include poor commitment; disagreement over operating policies, strategies, and tactics; and differences in the approach towards management style and systems

5

Q_4) what are intensive strategies, explain each with relevant example? (5 marks

Intensive Strategies

Market penetration, market development, and product development are sometimes referred to as

Intensive strategies because they require intensive efforts to improve a firm’s competitive position with existing products.

Market development involves introducing present products or services into new geographic areas. The climate for international market development is becoming more favorable. In many industries, such as airlines, it is going to be hard to maintain a competitive edge by staying close to home

Product Development

Product development is a strategy that seeks increased sales by improving or modifying present products or services. Product development usually entails large research and development expenditures. The U.S. Postal Service now offers stamps and postage via the Internet, which represents a product development strategy. Page#89

Question No: 29 ( Marks: 3 )

Explain test marketing and its significance for an organization.

Answer: Test markets allow an organization to test alternative marketing plans and to forecast future sales of new products. In conducting a test market project, an organization must decide how many cities to include, which cities to include, how long to run the test, what information to collect during the test, and what action to take after the test has been completed. Test marketing

is used more frequently by consumer goods companies than by industrial goods companies. Test marketing can allow an organization to avoid substantial losses by revealing weak products and ineffective marketing approaches before large-scale production begins.page#61

Question No: 30 ( Marks: 3 )

Vertical integration is the degree to which the firm owns its upstream and its downstream buyers. What can be the possible benefits if the firm goes for vertical integration?

Answer: Benefits of vertical integration:

Allow a firm to gain control over:

 Distributors (forward integration)

 Suppliers (backward integration)

6

 Competitors (horizontal integration) page#81

What is the significance of Research and Development for an organization?

Answer:

Research and Development: The fifth major area of internal operations that should be examined for specific strengths and weaknesses is research and development (R&D). Many firms today conduct no R&D, and yet many other companies depend on successful R&D activities for survival. Firms pursuing a product development strategy especially need to have a strong R&D orientation.

The purpose of research and development are as follows:

 Development of new products before competition

 Improving product quality

 Improving manufacturing processes to reduce costs page#71

Question No: 31 ( Marks: 5 )

What are the five forces of Porter’s Five Forces Model?

Porter’s Five- Forces Model

The central point lays the stress on rivalry of the competing firm. This relates to the intensity of the rivalry. How the firms compete with each other and to what extent? That should be taken into account very carefully. Potential entry for new competitors shows a balance between different firms competing in a market. It also refers whenever a new partner enter into a market he may become threat for one and opportunity for other competing partners. As all the new entries and existing firms are competing with each other so the new entry will definitely make an effect on every one transacting in the market. A potential development of substitute products also develops an environment of competition in the market among the competing partners. As all firms want to compete in term of quality and substitute will lasts for longer in the market if the quality of the substitute will be greater than the existing alternate. Other factors also have a major impact on the substitutes. Collective bargaining power of suppliers and consumers: if vendors are less in the market and the organizations that have to purchase from those vendors are more then the demand for those suppliers will be more as the firms have to purchase from that less suppliers.

The reverse is the case if suppliers are more and buyers are less. Then the demand for those suppliers will be less. Such circumstances create difficulties in bargaining.

These above five components constitute the basics elements for the competitive analysis.

Page#43

Question No: 32 ( Marks: 5 )

Explain Merger and Acquisition with the help of examples (examples should be related to a multinational or local company operating in Pakistan)?

7

When we use the term “merger”, we are referring to the merging of two companies where one new company will continue to exist. The term “acquisition” refers to the acquisition of assets by one company from another company. In an acquisition, both companies may continue to exist. example main polka and walls or milk pack and nestle

Question No: 31 ( Marks: 5 )

What are the two basic types of R & D that can take place in an organization?

Types of research and development

Basic research:

Basic research is experimental or theoretical work undertaken primarily to acquire new

knowledge of the underlying foundation of phenomena and observable facts, without any particular application or use in view.

Applied research:

Applied research is also original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific practical aim or objective.

Experimental development:

Experimental development is systematic work, drawing on existing knowledge gained from research and/or practical experience, that is directed to producing new materials, products or

devices, installing new processes, systems and services, or improving substantially those already produced or installed.

Question No: 31 ( Marks: 5 )

Mr. Mansoor is a finance manager of a firm. He is asked to prepare a financial ratio analysis. What can be the possible limitations of his analysis?

Financial ratio analysis is not without some limitations. First of all, financial ratios are based on accounting data, and firms differ in their treatment of such items as depreciation, inventory valuation, research and development expenditures, pension plan costs, mergers, and taxes. Also, seasonal factors can influence comparative ratios. Therefore, conformity to industry composite ratios does not establish with certainty that a firm is performing normally or that it is well managed. Likewise, departures from industry averages do not always indicate that a firm is doing especially well or badly. Page#67

Question No: 41 ( Marks: 5 )

A good mission statement should include “Customer orientation”, what does it mean? Explain it with the help of simple examples.

8

Customer orientation definition: customer orientation is a set of activities undertaken by a company for the purpose of supporting beliefs in sales that allow considering customer needs and satisfaction as the major priorities of the company. Read the customer orientation template to find out how to undertake and maintain customer oriented processes in your organization.

Example:

This is the way AT&T’s mission statement focuses on communication rather than telephones and ONGC’s mission statement focuses on energy rather than oil and gas page#24

Question No: 42 ( Marks: 5 )

What are strengths and weaknesses of an organization? Explain with the help of examples.

The strengths and weaknesses internal to the organization we can define as:

Strengths: characteristics of the business or team that give it an advantage over others in the industry. Examples: As far as organizations go, strengths can include a known brand name and reputation, good quality service or products, a strong management team, and a strong sales staff.

An individual can have strengths with a good word-of-mouth reputation and strong experience in an area of knowledge.

Weaknesses: are characteristics that place the firm at a disadvantage relative to others.

to understand how their jobs, departments, and divisions fit into the whole organization than the external audit”.

an internal audit provides more opportunity for participants to understand how their jobs, departments, and divisions fit into the whole organization. This is a great benefit because managers and employees perform better when they understand how their work affects other areas and activities of the firm. For example, when marketing and manufacturing managers jointly discuss issues related to internal strengths and weaknesses, they gain a better appreciation of issues, problems, concerns, and needs in all the functional areas. PAGE#50

Question No: 42 ( Marks: 5 )

What are strategies? Discuss their significance for an organization.

Definitions :

 Strategy refers to a plan of action designed to achieve a particular goal.

 Alternative chosen to make happen a desired future, such as achievement of a goal or solution to a problem.

significance for an organization:

 Strategy is more important than ever, particularly for organizations that want to differentiate themselves from others.

 The core aspects of strategies are to sustain a competitive advantage on other organizations

 Managers are at all time should be involved in implementing the set strategies.

9

 Strategic implementation entails the transformation of an organization strategies plan into action and ultimately into a result

 It increase its capacity to compete on the basis of its intellectual competencies

Question No: 41 ( Marks: 5 )

If CPM matrix reveals total weighted score of

_ A is 2.50

_ B is 1.50

_ C is 3.24

From above given data, how would you interpret the total weighted score of each firm and compare firm B with firm A and firm C.

B is the weakest firm as compared to A and c (for more detail see page#46)

Question No: 42 __ ( Marks: 5 )

Staffing is one of the functions of managers. Enlist and describe any five basic activities to be performed under the faction of staffing?

Staffing activities are centered on personnel or human resource management. Included are wage

“Strategists today must possess skills to deal more legalistically and politically than

Previous strategists”. Elaborate this statement?

Strategists today must possess skills to deal more legalistically and politically than previous strategists, whose attention was directed more too economic and technical affairs of the firm.

Strategists today are spending more time anticipating and influencing public policy actions. They spend more time meeting with government officials, attending hearings and government sponsored conferences, giving public speeches, and meeting with trade groups, industry associations, and government agency directors. Before entering or expanding international operations, strategists need a good understanding of the political and decision-makings processes

in countries where their firm may conduct business. For example, republics that made up the formerSoviet Uniondiffer greatly in wealth, resources, language, and lifestyle. Page#36

Question No: 42 ( Marks: 5 )

Explain any two intensive strategies with examples?

Product Development:

Developing and modifying new products and offering to the existing market is called product development strategy

Example: Google develop a new browser Chrome for the existing internet user

Market development:

Developing a new market for the existing company product is called market development strategy. It involves introducing present products or services into new geographic areas.

Question No: 1 ( Marks: 1 ) – Please choose one
Which of the following is opposite to the literal meanings of Tax?
Burden
Strain
Load
Relieve
REF:
Literal meanings —– Burden, Strain
Question No: 2 ( Marks: 1 ) – Please choose one
Which of the following is the main source of revenue generation of the state?
Taxes & Tariffs
Internal Borrowing
External Borrowing

Penalties & Fines

Question No: 3 ( Marks: 1 ) – Please choose one
_____ is paid to the government on goods and services and can be reclaimed by
retailers.
Income Tax
Value Added Tax
Capital Value Tax
Wealth Tax
Ref:
value added tax is the tax that is only refundable and apply of the good and services.
Question No: 4 ( Marks: 1 ) – Please choose one
Which of the following is not an employment tax?
Social Security Tax
Federal Excise Tax
Federal unemployment compensation tax
State unemployment compensation tax
Ref:
for above mcqs is correct because after reading the definiation of federal excise tax you
should be able to differencete from the aboe. it the tax that government ampossed on the
import of a good and services thats why it has no connection with employment tax.
Question No: 5 ( Marks: 1 ) – Please choose one
How many Schedules are contained in the Income Tax Ordinance 2001?
For evaluation only.Three Schedule
Fifth Schedule
Seven Schedules
Nine Schedules
Ref:
Basic Features of Income Tax Ordinance 2001
Scheme of the Ordinance is given below:
There are thirteen chapters
Chapters are divided into:
ƒParts &
ƒDivisions
There are 240 Sections
This ordinance comprises of seven Schedules
Schedules are integral part of the Ordinance.

Question No: 6 ( Marks: 1 ) – Please choose one
Under which of the following sections of Income Tax Ordinance 2001 vested the
powers to CBR in order to formulate the IT rule 2002?
Section 206
Section 213
Section 237
Section 238
Ref:
IT rules 2002
These were promulgated by CBR on 1st July 2002 in exercise of powers granted under
section 237 of theOrdinance.
Question No: 7 ( Marks: 1 ) – Please choose one
Which one of the following is the Internal aid and help in the interpretation of
Punctuation marks
CBR’s circulars
Definitions in other statutes
Departmental manuals
Ref:
Internal Aids:
These are available in the Act:
ƒ Explanation to the section
ƒ Marginal notes
ƒ Punctuation marks
ƒ Preamble
ƒ Title of a chapter
ƒ Non-Obstinate clause
ƒ Proviso
ƒ Context
Question No: 8 ( Marks: 1 ) – Please choose one
Section 2(13) of Income Tax Ordinance 2001 defined:
“Commissioner” means a person appointed as a Commissioner of Income Tax
For evaluation only.yle=”text-align: left; direction: ltr; margin: 0px;” dir=”ltr”>under section 208, and includes
a taxation officer vest ed with all or any of the
powers, and functions of the Commissioner;
In which criteria the above definition falls?
Exclusive definition
Inclusive definition
Both Exclusive and Inclusive definitions
Statutory definition
Ref:
Question No: 9 ( Marks: 1 ) – Please choose one
Under which of the following conditions a tax payer can adopt a special tax year?
Whenever he decides so
After seeking approval from Tax Office
After seeking approval from Commissioner of income tax
After seeking approval from High Court
Ref:
Special Tax Year:
In case a person has a different accounting period from normal tax year or adopted such
aperiodafter seeking approval from commissioner under section 74(3) it is called special
tax year.
Question No: 10 ( Marks: 1 ) – Please choose one
Mr. A & B Joint Owners of a Building, Which of the following is the legal status
under the provisions of Section 80 of the Ordinance?
Company
Association of Persons
Hindu Undivided Family
Ref:
• “An association of persons”—includes a firm, a Hindu Undivided Family, any artificial
juridical personand anybody of persons formed under a foreign law, but doesn’t include a
company.
Question No: 11 ( Marks: 1 ) – Please choose one
Which of the following is the legal status of Mr. Z, a Director in Private Company
under section 80 of the Income tax ordinance 2001?
Individual
Company
Firm
Hindu Undivided Family
Ref:
Person—Sec. 2(42) read with section 80. Person includes:
• An individual
• • A company or association of persons incorporated or formed in Pakistan or elsewhere;
and
• The federal Government,
• a foreign government,
a political sub division of foreign government, or
• Public international organization
Question No: 12 ( Marks: 1 ) – Please choose one
Which of the following is NOT an example of deemed income?
Golden hand shake
All of the given options
Loan through cross cheque
Gifts through proper transaction
Ref:
Deemed Income at Par with real income
Cash Basis Vs Accrual Basis
Illegal Income
Lump Sum Receipts
Tax-free income
Question No: 13 ( Marks: 1 ) – Please choose one
If the land situated in Pakistan and used for agriculture purposes then which of
the following factor make distinction between agriculture and non-Agriculture
Income?
Nationality of Pakistan
Quantity of the product
Time period
Human effort
Question No: 14 ( Marks: 1 ) – Please choose one
Suppose a merchant acquired Profit from the purchase of standing crops and
resale of it after harvesting. The profit of the merchant will be treated in which of
the following way?
Agriculture Income
Income from Business
Income from Property
Capital Gain
Ref:
Following Incomes are held to be “Non-Agricultural Income”
Profit accruing from the purchase of standing crops and resale of it after harvest by a
merchant having no interest in land except a mere license to enter upon the land and
gather upon the produce, land is not direct, immediate or effective source of income
Question No: 15 ( Marks: 1 ) – Please choose one
Mr. Ali being citizen of Pakistan of 60 years old, if his total taxable income is
Rs.400,000. His tax liability will be reduced by ______ under Part 3 of second
schedule.
10%
25%
50%
75%
Ref:
Reduction in Tax Liability under Second Schedule Part 3
• Any amount received as flying allowance by pilots etc. and junior commissioned officers
or other ranks shall be taxed @2.5% as separate block.
For evaluation only.• Senior citizen-age 60 years &above where taxable income not exceeding Rs. 400,000/-
tax liability reduced by 50%.
Question No: 16 ( Marks: 1 ) – Please choose one
M/s ABC & Co. has been incorporated under Pakistan Companies Ordinance 1984.
However it’s most of the branched and control and management of affairs wholly
situated out of Pakistan? What will be the residential status of M/s ABC & Co.?
Resident Company
Non-Resident Company
Resident Individual
Resident AOP
Question No: 17 ( Marks: 1 ) – Please choose one
Which part of income is charged to tax of resident person under the income tax
ordinance 2001?
Pakistani source of income
Foreign source of income
Both Pakistan and foreign source of income
None of the given option
Ref:
Scope of Total Income of a Resident Person Section 11 (5)
Resident Person Changeable to tax on:
• The income of a resident person under a head of income shall be computed by taking
into account amounts that are Pakistan-source income and amounts that are foreign-
source income
• Pakistan Source Income & Foreign Source Income Sec.11 (5) whereas, non-resident
person charged only on Pakistan Source Income Sec.11 (6)
Question No: 18 ( Marks: 1 ) – Please choose one
Which part of income is charged to tax of non-resident person under the income
tax ordinance 2001?
Pakistani source of income
Foreign source of income
Both Pakistan and foreign source of income
None of the given option
Ref:
whereas, non-resident person charged only on Pakistan Source Income Sec.11 (6)
Question No: 19 ( Marks: 1 ) – Please choose one
____________ means a fixed place of business through which the business of
an enterprise is wholly or partly carried on.
Permanent establishment
Small Business Units SBU
Venture
Ref:
see section 2(41) at page no 9.
Question No: 20 ( Marks: 1 ) – Please choose one
Which of the following come under the ambit of Royalty under section 2 (54)?
Copy right of a literary
Right to use any industrial or scientific equipment
All of the given options
Ref:
Royalty Defined Sec. 2 (54)
Royalty means any amount paid or payable however described or computed, whether
periodical or lump sum, as a consideration for:
a)The use of, or right to use any patent, invention, design or model, secret formula or
process, trade mark
or other like property or right;
b)The use of, or right to use any copy right of a literary, artistic or scientific work,
including films or video
tapes for use in connection with television or tapes in connection with radio broadcasting,
but shall not
include consideration for the sale, distribution or exhibition of cinematograph films.
c)The receipt of, or right to receive, any visual images or sounds or both, transmitted by
satellite, cable,
optic fiber or similar technology in connection with television, radio or internet
broadcasting;
d)The supply of any technical, industrial, commercial or scientific knowledge, experience
or skill;
e)The use of or right to use any industrial, commercial or scientific equipment;
f)The supply of any assistance that is ancillary and subsidiary to, and is furnished as a
means of enabling
the application or enjoyment of, any such property or right as mentioned in sub-clause (a)
through (e)
g)The disposal of any property or right referred to in (sub-clause) (a) through (e).
Question No: 21 ( Marks: 1 ) – Please choose one
What is the relation between the Non-resident and permanent establishment
as per section 105?
Both have same legal entity
Both are separate legal entity
Both are dependent on each other
None of the given options
Ref:
• The profit of the permanent establishment shall be computed on the basis that it is a
distinct and separate person engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the non-resident person of which
it is a permanent establishment;
Question No: 22 ( Marks: 1 ) – Please choose one
Salary by members of AOP is not treated as Salary but treated as appropriation of
profit and charged under the head:
Income from Salary
Income from Property
Income from Business
Ref:
Salary by members of AOP is not treated as Salary but treated as appropriation of profit
and charged under the head “Income from Business”
Question No: 23 ( Marks: 1 ) – Please choose one
In which of the following heads of Income No deductions are allowed:
Salary Income
Income from Property
Income from Business
Capital Gains
Ref:
No deductions are allowed under the head “Income from Salary”
Question No: 24 ( Marks: 1 ) – Please choose one
Mr Ali is an employee of ABC Co. the company has provided a driver and a
gardener to Mr. Ali. What will be the treatment of their salaries as per Income
Tax Ordinance 2001?
The salaried paid to them added in the salary of MR. Ali
The salaried paid to them subtracted in the salary of MR. Ali
Have no relation with salary of Mr. Ali
The Salaried paid are exempted from Tax
Question No: 25 ( Marks: 1 ) – Please choose one
A directorship or any other office involved in the management of a company
under section 2(22) of Income Tax Ordinance, 2001 is termed as:
Employment
Employer
Employee
Business premises
Ref:
2(22) “employment includes:
• a directorship or any other office involved in the management of a company;
• a position entitling the holder to a fixed or ascertainable remuneration; or
• the holding or acting in any public office;
Question No: 26 ( Marks: 1 ) – Please choose one
Mr. A non-resident of Pakistan received interest on Australian Bonds Rs.
100,000 (half amount received in Pakistan). What is the treatment of this
amount for calculating his gross total income?
Rs. 100,000 added in his total income
Rs. 100,000 subtracted from his total income
Rs. 50,000 added in his total income
Exempt from tax
Ref:
Page no 35 exercise no 3
Question No: 27 ( Marks: 1 ) – Please choose one
Mr. X employed in Pakistan remittance from USA received Rs. 10,000 in
Pakistan from past profits. Which of the following is right for the above scenario?
income
Mr. X being resident of Pakistan Rs. 10,000 will be Subtracted in Gross
total income
Mr. X being non-resident of Pakistan Rs. 10,000 will be added in Gross
total income
Remittance is not income hence it is not included
Ref:
Note 1:
Since remittance is not income, hence it is not included.
Page 33 exercise not 1
Question No: 28 ( Marks: 1 ) – Please choose one
Mr. X resident of Pakistan remittance from UK received Rs. 20,000 in Pakistan
from past profits. Which of the following is right for the above scenario?

Mr. X being resident of Pakistan Rs. 20,000 will be added in Gross total
income
Mr. X being resident of Pakistan Rs. 20,000 will be Subtracted in Gross
total income
Mr. X being non-resident of Pakistan Rs. 20,000 will be added in Gross
total income
Remittance is not income hence it is not included
Question No: 29 ( Marks: 1 ) – Please choose one
Mr. Kishan Kumar during his yearly tour in Pakistan spends 155 working days, 26
off-working days 1 strike day and 1 Public Holiday in a tax year 2008-09? What
will be the status of the individual?
Resident Individual
Non Resident Individual
Resident Person
Resident HUF
Ref:
155+26+1+1=183
Resident Individual (Section 82)
• An individual shall be a resident individual for a tax year if the individual-
• is present in Pakistan for a period of, or periods amounting in aggregate to, one
hundred and eighty-three days or more in the tax year; or
• Is an employee or official of the Federal Government or a Provincial Government posted
abroad in the tax year?
Question No: 30 ( Marks: 1 ) – Please choose one
Mr. Zeeshan during his yearly tour in Pakistan spends 180 working days and in a
tax year 2008-09? What will be the status of individual?
Resident Individual
Non-Resident Individual
Resident Person
Resident HUF
Ref:
Resident Individual (Section 82)
• is present in Pakistan for a period of, or periods amounting in aggregate to, one
hundred and eighty-three days or more in the tax year; or
• Is an employee or official of the Federal Government or a Provincial Government posted
abroad in the tax year?

Question No: 31 ( Marks: 5 )
Why the right to acquire share is not chargeable to tax under Employee Share
Scheme section 14. Under what condition the right to acquire share under section
14 is taxable?
Answer:
Employee Share Schemes sec 14:
ƒThe value of a right or option to acquire share under this scheme shall be not chargeable
to tax.
ƒWhere shares issued are subject to a restriction on transfer of the shares-
a)no amount shall be chargeable to tax under the head Salary until the earlier of-
i. the time the employee has a free right to transfer the shares; or
ii. the time the employee disposes of the shares &
b)the amount chargeable to tax to the employee shall be fair market value of shares at the
time
employee has free right to transfer as reduced be any amount given as consideration for
the grant
of a right or option to acquire the shares.
ƒWhere in a tax year an employee disposes of a right or option to acquire shares under an
employee
share scheme, the amount chargeable to tax shall include the amount of any gain made on
the
disposal computed accordance with the following formula:
A-B
ƒWhere A is the consideration received from the disposal of the right or option.
ƒB is the employee’s cost in respect of the right or option.
Question No: 32 ( Marks: 10 )
What is meant by Fiscal Policy?
Highlight the role of taxes in Fiscal Policy. Differentiate between Budget deficit
and Budget Surplus.

Answer:
What is Fiscal Policy?
Fiscal policy is a discipline that deals with arrangements which are adopted by government
to
collect the revenue and make the expenditures so that social and economic stability could
be attained /
maintained.
™ Objectives of Fiscal Policy
Economic Development
Raising level of employment (Achieving full employment level)
Influencing consumption patterns
Redistribution of income
Removal of deficit in Balance of Payments
™ Instruments of Fiscal Policy
Government Expenditures
Taxes
Deficit Financing
Subsidies
Transfer Payments—like Unemployment Allowances etc.
Sources for Revenue Generation for State
ƒ Taxes, Tariffs
ƒ Internal & External Borrowing
ƒ Penalties & Fines
ƒ Aids & Grants
\===========================================\
Collected by The S Team
\===========================================\

Total Question was 32
28 MCQ
And 4 Subjective
2 for 3 Num
And 2 for 5 Num
And the Subjective question was these…..

1) What is Individual resident status explain its different points?

2)If Mr. Kamal resident of Pakistan suffered a foreign loss against the income
received from foreign country in tax year. What is the treatment of such
foreign loss? Which section deals this kind of loss? Such losses can be
carried forward up to how many years?

3)What is association of person and how profit will be distributed among partners?

4)Profit on debt earned by a non-resident person is exempt from tax under clause (77) of Part I of the second schedule. Is this exemption only available to “Individuals” as reference has been made to persons being citizens of Pakistan or otherwise? Provide the details of this clause.

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FIN623 MIDTERM PAPER 2011 ALL IN 1 THREAD
Fin 623 my paper
There were 23 total questions
mcq`s were from all past papers
Five were subjective
Q1
Section 45 pride of performance president award? Marks 3
Q2
If Mr. Kamal resident of Pakistan suffered a foreign loss against the income
received from foreign country in tax year. What is the treatment of such
foreign loss? Which section deals this kind of loss? Such losses can be
carried forward up to how many years? 5marks
Q3
Tax treatment of utilites paid by a abc company to an employee in tax year 2009?

*1)* What is Individual resident status explain its different points?*
2)*If Mr. Kamal resident of Pakistan suffered a foreign loss against the
income received from foreign country in tax year. What is the treatment of such Foreign loss? Which section deals this kind of loss? Such losses can be carried forward up to how many years?*

*3)*What is association of person and how profit will be distributed among partners?*

*4)* Profit on debt earned by a non-resident person is exempt from tax under clause (77) of Part I of the second schedule. Is this exemption only
available to “Individuals” as reference has been made to persons being
citizens of Pakistan or otherwise? Provide the details of this clause.*

Question # 2: If Mr. Kamal resident of Pakistan suffered a foreign loss against the income received from foreign country in tax year. What is the treatment of such foreign loss? Which section deals this kind of loss? Such losses can be carried forward up to how many years? (3 Marks)

Question # 3: What is association of person and how profit will be distributed among partners? (5 Marks)

Question # 4: Profit on debt earned by a non-resident person is exempt from tax under clause (77) of Part I of the second schedule. Is this exemption only available to “Individuals” as reference has been made to persons being citizens of Pakistan or otherwise? Provide the details of this clause. (5 Marks)
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Question # 1: Under which circumstances business income of a non-resident person shall be considered as Pakistan-source income? (Marks 3)

Question # 2: Determine total income of Mr. Sharif, a non-resident individual for tax year 2009. Relevant data is given below:
i. Share of profit received in Singapore from a business controlled through a permanent establishment in Pakistan Rs 200,000.
ii. Salary income of Mr. Sharif from an employment in Pakistan Rs600,000
iii. Remittance received from China Rs 400,000
iv. Profit on debt received on deposits kept with a bank in Pakistan Rs 50,000
(5 Marks)

Question # 3: What is Employeement under the section of Income Tax Ordinance 2001? (3 Marks)

Question # 4: Describe the Tax tretement for the agricultural income that is being used by the cultivator as the raw material for his business? (5 Marks)
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OBJECTIVE FROM THE PAST PAPERS

29.Question No: 30 ( Marks: 3 )
Under which conditions any royalty is treated as Pakistan source income if it
is paid by: (3)
i. Resident person
ii. Non-resident person
30.Is award to a person by the president of Pakistan taxable? also write the section of those awards (3)
31.Explain Aid agreement w.r.t salary income (5)
32.Determine total income of Mr. Sharif, a non-resident individual for tax year
2009. Relevant data is given below: (5)
i. Share of profit received in Singapore from a business controlled
through a permanent establishment in Pakistan Rs 200,000.
ii. Salary income of Mr. Sharif from an employment in Pakistan
Rs600,000
iii. Remittance received from China Rs 400,000
iv. Profit on debt received on deposits kept with a bank in Pakistan Rs
50,000
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saima but

1) What is Individual resident status explain its different points?

2) If Mr. Kamal resident of Pakistan suffered a foreign loss against the income

received from foreign country in tax year. What is the treatment of such

foreign loss? Which section deals this kind of loss? Such losses can be

carried forward up to how many years?

3)

What is association of person and how profit will be distributed among partners?

4)

Profit on debt earned by a non-resident person is exempt from tax under clause (77) of Part I of the second schedule. Is this exemption only available to “Individuals” as reference has been made to persons being citizens of Pakistan or otherwise? Provide the details of this clause.

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Under which conditions any royalty is treated as Pakistan source income if it
is paid by: (3)

Answer:
i. Resident person
ii. Non-resident person
A royalty shall be Pakistan-source income if it is:
• Paid by resident person, except where the royalty is payable in respect of any right,
property, or information used, or services utilized for the purposes of a business carried on
by the resident outside Pakistan through a permanent establishment; or
• Borne by a permanent establishment in Pakistan of a non-resident person

Is award to a person by the president of Pakistan taxable? also write the section of those awards (3)

Answer:
Section 45 President’s Honour
(1) Any allowance attached to any Honour, Award, or Medal awarded to a person by the President of
Pakistan shall be exempt from tax under this Ordinance.
(2) Any monetary award granted to a person by the President of Pakistan shall be exempt from tax under
this Ordinance.

Determine total income of Mr. Sharif, a non-resident individual for tax year
2009. Relevant data is given below: (5)
i. Share of profit received in Singapore from a business controlled
through a permanent establishment in Pakistan Rs 200,000.
ii. Salary income of Mr. Sharif from an employment in Pakistan
Rs600,000
iii. Remittance received from China Rs 400,000
iv. Profit on debt received on deposits kept with a bank in Pakistan Rs
50,000

Solution: p#33

Particulars Gross total income if non-resident

Share of profit received 200,000
Salary income 600,000
Remittance received NIL
Profit on debt received NIL
total income 800,000

Question No: 30 ( Marks: 3 )
If Mr. Kamal resident of Pakistan suffered a foreign loss against the income
received from foreign country in tax year. What is the treatment of such
foreign loss? Which section deals this kind of loss? Such losses can be
carried forward up to how many years?
Answer
Foreign losses Sec.104: Deductible expenditures incurred by a person in deriving foreign source
income chargeable to tax under a head of income shall be deductible only against that income.
Foreign losses carried forward up to 6 years
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Mr. Irfan resident of Pakistan received salary from UK. He has also paid tax on his
salary from UK as per the tax laws prevailing there. What will be the tax treatment
of his salary as a Pakistani resident? Which section of the income tax ordinance
deals this scenario?
Answer Foreign-Source Salary Income [102]
Mr. Irfan’s salary from UK would be exempted from tax, because he has paid tax on his salary from UK. Under Foreign-Source Salary Income [section102] foreign source salary income of a resident individual will be exempt from tax, if he has paid foreign income tax in respect of such income. Payment of foreign tax means that the employer has deducted the tax at source and deposited the same to the revenue authorities of the country in which employment was exercised.

Q2: profit on debt in which conditions will be Pakistan source
of income.
1. Resident person (25) page
2-Non Resident Person (25) page.
Answer
Profit on debt shall be Pakistan-source income if it is-
(1) Paid by a resident person, except where the profit is payable in respect of any debt used for the purposes of a business carried on by the resident outside Pakistan through a permanent establishment; or
(2) Borne by a permanent establishment in Pakistan of a non-resident person.

3) Explain the two terms with their relevant sections (5 marks)
Resident individual (page 23,26,27)
Resident AOP(27,36,)
Answer
Resident Individual (Section 82)
• An individual shall be a resident individual for a tax year if the individual:
• is present in Pakistan for a period of, or periods amounting in aggregate to, one hundred and [eighty-three] days or more in the tax year; or
• is an employee or official of the Federal Government or a Provincial Government posted abroad in the tax year.
Resident Association of Persons Sec. 84
An association of persons shall be a resident association of persons for a tax year if the control and management of the affairs of the association is situated wholly or partly in Pakistan at any time in the year.

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samiya sis
My Today FIN630 20 MAY 2011
Q: What you meant by Returning Expatriate? Explain Tax treatment under section 51?
Q: Treatment of Foreign loss of a resident person Mr Basit?section?
Q: Resident Individual and AOP?
Q: Bench Mark Rate?
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Administrator
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Administrators Posts: 386
Joined: Apr 2011
Reputation: 2
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RE: FIN623 MIDTERM PAPER FALL 2011 MONTH OF MAY
Fin 623 my paper
There were 23 total questions
mcq`s were from all past papers
Five were subjective
Q1
Section 45 pride of performance president award? Marks 3
Q2
If Mr. Kamal resident of Pakistan suffered a foreign loss against the income
received from foreign country in tax year. What is the treatment of such
foreign loss? Which section deals this kind of loss? Such losses can be
carried forward up to how many years? 5marks
Q3
Tax treatment of utilites paid by a abc company to an employee in tax year 2009?
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29.Question No: 30 ( Marks: 3 )
Under which conditions any royalty is treated as Pakistan source income if it
is paid by: (3)
i. Resident person
ii. Non-resident person
30.Is award to a person by the president of Pakistan taxable? also write the section of those awards (3)
31.Explain Aid agreement w.r.t salary income (5)
32.Determine total income of Mr. Sharif, a non-resident individual for tax year
2009. Relevant data is given below: (5)
i. Share of profit received in Singapore from a business controlled
through a permanent establishment in Pakistan Rs 200,000.
ii. Salary income of Mr. Sharif from an employment in Pakistan
Rs600,000
iii. Remittance received from China Rs 400,000
iv. Profit on debt received on deposits kept with a bank in Pakistan Rs
50,000
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Question # 1: Under which circumstances business income of a non-resident person shall be considered as Pakistan-source income? (Marks 3)

Question # 2: Determine total income of Mr. Sharif, a non-resident individual for tax year 2009. Relevant data is given below:
i. Share of profit received Paper copy from vu thirty nine dot com in Singapore from a business controlled through a permanent establishment in Pakistan Rs 200,000.
ii. Salary income of Mr. Sharif from an employment in Pakistan Rs600,000
iii. Remittance received from China Rs 400,000
iv. Profit on debt received on deposits kept with a bank in Pakistan Rs 50,000
(5 Marks)

Question # 3: What is Employeement under the section of Income Tax Ordinance 2001? (3 Marks)

Question # 4: Describe the Tax tretement for the agricultural income that is being used by the cultivator as the raw material for his business? (5 Marks)
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ubjective Questions are:
Determine total income of Mr. khalid, a resident individual for tax year
2009. Relevant data is given below:
He get salary Rs.400,000.
He get profit on shares from UK Rs. 100,000.
He get remittance from India Rs.360,000. and
he get profit on debt Rs. 650,000. What is his gross total income. (marks : 5)

What is mean by the short-term resident. Identify the tax treatment? (marks : 5)

Question No: 31 ( Marks: 5 )
Why the right to acquire share is not chargeable to tax under Employee Share
Scheme section 14. Under what condition the right to acquire share under section
14 is taxable?
Answer:
Employee Share Schemes sec 14:
ƒThe value of a right or option to acquire share under this scheme shall be not chargeable to tax.
ƒWhere shares issued are subject to a restriction on transfer of the shares-
a)no amount shall be chargeable to tax under the head Salary until the earlier of-
i. the time the employee has a free right to transfer the shares; or
ii. the time the employee disposes of the shares &
b)the amount chargeable to tax to the employee shall be fair market value of shares at the time
employee has free right to transfer as reduced be any amount given as consideration for the grant
of a right or option to acquire the shares.
ƒWhere in a tax year an employee disposes of a right or option to acquire shares under an employee
share scheme, the amount chargeable to tax shall include the amount of any gain made on the
disposal computed accordance with the following formula:
A-B
ƒWhere A is the consideration received from the disposal of the right or option.
ƒB is the employee’s cost in respect of the right or option.
Question No: 32 ( Marks: 10 )
What is meant by Fiscal Policy?
Highlight the role of taxes in Fiscal Policy. Differentiate between Budget deficit
and Budget Surplus.

Answer:
What is Fiscal Policy?
Fiscal policy is a discipline that deals with arrangements which are adopted by government to
collect the revenue and make the expenditures so that social and economic stability could be attained /
maintained.
™ Objectives of Fiscal Policy
Economic Development
Raising level of employment (Achieving full employment level)
Influencing consumption patterns
Price stability
Redistribution of income
Removal of deficit in Balance of Payments
™ Instruments of Fiscal Policy
Government Expenditures
Taxes
Deficit Financing
Subsidies
Transfer Payments—like Unemployment Allowances etc.
Sources for Revenue Generation for State
ƒ Taxes, Tariffs
ƒ Internal & External Borrowing
ƒ Penalties & Fines
ƒ Aids & Grants
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Question No: 31 ( Marks: 5 )
Why Government levy tax on Person? What are the important elements that take
into consideration while levying tax?
Answer:
™ Taxes Vs Fees:
Taxes are compulsory levy and it is the legal obligation of the person to pay the amount of tax which is required to pay under the law, where as payment of fee is the discretion of any person and when a fee is paid, the person becomes an entitled to claim counter benefits.
™ Taxes are important instrument of Fiscal Policy.
Question No: 32 ( Marks: 10 )
Determine Gross total income of Mr. Imran in the light of following particulars
information pertaining to tax year 2008.
a. Dividends received in UK on 20th Aug 2008 from a Pakistani resident
company: amounting Rs. 50,000.
b. Interest on Swiss Bonds (one-third is received in Pakistan) Rs. 60,000.
c. Pension from Pakistan Government but received in New York Rs. 25,000.
d. Rent for tax year 2008 of a house property situated in New York and
received there on 01-01-2008; Rs.500,000.
e. Income from agriculture in New York received there but later on remitted
to Pakistan Rs.80,000.
Find out gross total income of Mr. Imran, if he is:
a. Pakistani resident
b. Non– resident
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Question No: 31 ( Marks: 5 )
Define Income that is charged to tax under section 2(9).
Answer:
Business Defined Section 2(9)
“Business includes any trade, commerce, manufacture, profession, vocation but doesn’t include employment”
Following incomes (except exempt income) shall be charged to tax under the head ‘Income from Business’.
a)Profits & Gains from any business in a tax year.
b)Income derived from any trade, profession, sale of goods or provision of any services.
c)Income from hire or lease of tangible movable property.
d)FMV of Perquisites derived by a person by virtue of business relationships.
e)Management Fee derived by a management company.
Income from Business also includes:
• Any profit on debt derived by a person. (it is only applicable to such person, whose is business is to
derive such income. e.g.; a banking company)
• Any amount received by schedule bank from mutual fund, as share of profit.
• Profit earned on debts in course business shall be chargeable to ‘income from business’.
• Income on leasing by lessor, being banks, leasing companies etc.
Income derived from any trade, profession, sale of goods or provision of any services.
• Income from hire or lease of tangible movable property
• FMV of Perquisites derived by a person by virtue of business relationships.
• Management Fee derived by a management company
Question No: 32 ( Marks: 10 )
Determine the legal status of the following persons under section 80 of the
ordinance.
1. Virtual University of Pakistan (company)
2. A joint family of Mr. Arun (a Hindu), Comprising Mr. Hamel, His sons
Mr. Kumar & Mr. Deepak (Hindu undivided family)
3 . Government of Punjab, Pakistan (company)
4. Edhi Welfare Trust (company)
5. Federal Government (person)
6 . Mr. Suleman & his wife Joint Owners in a House (Association of persons)
7. Alpha Cooperative Housing Society (company)
8. Mr. Ali & Babar Joint Owners in Building (Association of persons)
9. Mr. Imran Serving as a Manager in a Textiles Company (Individual)
10. Habib Modaraba (company)
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Question No: 29 ( Marks: 3 )
What is meant by reduction in tax liability? Give an example from Income Tax ordinance 2001?
Question No: 30 ( Marks: 3 )
If Mr. Kamal resident of Pakistan suffered a foreign loss against the income received from foreign country in tax year. What is the treatment of such foreign loss? Which section deals this kind of loss? Such losses can be carried forward up to how many years?
Question No: 31 ( Marks: 5 )
Define the following under the Income Tax Ordinance 2001 with their respective sections:
a. Resident Individual
b. Resident Associations of Persons
Question No: 32 ( Marks: 5 )
If Mr. Basit resident of Pakistan suffered a foreign loss against the income received from foreign country in tax year 2008-09. What is the treatment of such loss? Which section deals this kind of loss?
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Question No: 29 ( Marks: 3 )
What is meant by reduction in tax liability? Give an example from Income Tax ordinance 2001?
Question No: 30 ( Marks: 3 )
Define the employment as per its respective sections.
Question No: 31 ( Marks: 5 )
Define the following under the Income Tax Ordinance 2001 with their respective sections:
a. Resident Individual
b. Resident Associations of Persons
Question No: 32 ( Marks: 5 )
Mr. Bajwa resident of Pakistan received salary from UK. He claimed that he has also paid foreign tax in respect of his salary in UK. How his claimed will be verified and what is the tax treatment of his salary under which section of the income tax ordinance deals this scenario?
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: An association of persons named M/S Khan and sons has its
most of its branches in Pakistan is it sufficient to be resident
AOP or not?m5

Define the following their respective sections: m3
Employee
Employer
salary

Is the income of non- resident and resident taxed in Pakistan.define m5